As many as a third of laundry companies serving corporate clients in Hong Kong could shut down due to soaring fuel costs, an industry leader has warned, with some operators forced to reject new orders and freeze hiring.
Industry representatives said on Monday the price of industrial diesel, commonly known as “red diesel”, surged from about HK$6 (80 US cents) per litre in late February to as high as HK$17.50 in early April, an increase of more than 190 per cent.
The sharp rise has sharply raised operating costs for laundry businesses, which rely heavily on diesel-powered boilers to generate steam for high-temperature washing and sterilisation, particularly for hospital linens and hotel laundry.
Lee Lam, chairman of Yue Yi Laundry (Hong Kong) and the Laundry Association of Hong Kong, said the company used to spend more than HK$1 million on industrial diesel, but the cost rose to more than HK$5 million last month. He also expected the company to log a HK$3 million loss in April.
He said the company handled more than 100 tonnes of linen and used 12,000 litres of industrial diesel per day, with the city’s main luxury hotel chains, catering chains and private hospitals among its clients.
“Those operators lacking cash might be forced to close as they need to pay the diesel bills. I think there could be 20 to 30 per cent of operators closing,” Lee said.
